5 Dysfunctions of Using Profit As Your Only North Star Metric
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In a capitalistic society, profit is the fuel that allows us organizations to sustain and thrive. It is the fuel that can be used to invest in better and stronger human relationships. When it is used to create more possibilities in the world through re-investment, it is a beautiful thing. We need profit, so that we have the freedom to invest in our long-term future, and without it, it is only a matter of time before we are written into the history books. However, when we choose to make a profit or an ROI (Return on Investment), our ultimate driving metric, as many leaders do, it causes distortions in how the people in your ecosystem think, speak, and behave. We have to stamp out the mantras and leadership talk that worships profit, or ROI (Return On Investment) as the only north-star goal in business.
When we get the hierarchy of our goals and metrics clear for our teams, as a part of our vision, we are more likely to build environments where teams thrive as a result of their motivation and resiliency in the face of an ever-changing environment. It is a “yes, and” problem. We need to make a profit, and we need metrics that will create the space for and focus the intention and attention of the team so that creativity is sparked and progress is made toward these worthwhile goals.
There are many ways that overfocusing on profit leads to distortions in behavior. I’m going to explore five of the top reasons by analyzing them as polarities that demonstrate the need for both with clear dominance applied to the people-oriented, behavioral metrics. The suggestion here is that human behaviors can be measured and that goals that point us toward the purposeful development of human relationships should be at the top of our dominance hierarchy of goals. I call this “The Relationship Ladder” and propose some language for these goals around Trust, Loyalty, and Advocacy.
I will be referring to this diagram throughout the discussion:
